Economy

Chinese shares plummet nearly 5% over tightening moves

(chinadaily.com.cn)
Updated: 2010-04-19 17:17
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The Chinese stock market saw the biggest daily fall in eight months Monday, with Shanghai's key index closing lower than 3,000.

Property and finance industry heavyweights led the losses, with investor sentiment bruised by news about the government's real estate tightening moves.

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Chinese shares plummet nearly 5% over tightening moves Real estate market 'overheating'
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The benchmark Shanghai Composite Index dropped 150.01, or 4.79 percent, to close at 2,980.30 points. The Shenzhen Component Index plunged 6.22 percent to 11,644.58 points.

Commercial banks will be able to refuse loans to people buying their third houses in areas suffering from soaring property prices, the State Council, China's Cabinet, said on Saturday.

Before the move, the central government raised the required downpayment for a family purchasing a second house from the existing 40 percent to 50 percent, a policy that may not only restrict speculative house buying but also reduce banks' potential risks if property prices decline.

The central government measures target speculative house purchases, which are regarded as a key factor driving up property prices. The policies also show the government's resolve to curb excessive property growth and prevent growing financial risks, said Grant Ji, director of Savills (Beijing), a UK-based real estate service provider.
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